Is Cash King?

Last year, $695 trillion changed hands electronically in the U.S., according to NACHA, the Electronic Payments Association.

Consumers are embracing debit cards, direct-deposit payrolls, and online payments in record numbers. In fact, NACHA, the trade organization that develops rules for the Automated Clearing House (ACH) network, says that ACH payments grew from $19 trillion in 1999 to $20.3 trillion in 2000. They include direct deposits of payroll, Social Security benefits and tax refunds, direct payments of mortgages and other bills, business-to-business payments, and e-commerce payments.

Debit cards (which deduct money from a linked account) are the fastest-growing type of electronic payment.

Despite the large amount of money transferred electronically, the number of transactions by category tells a different story. Last year, there were 550 billion cash transactions, 69 billion check transactions, and only 49.5 billion electronic fund transfers. "Cash is still the most widespread form of payment, especially for smaller transactions," explains Michael Heard, NACHA spokesperson.

Will cash disappear? No, says Forrester Research analyst Michael Antecol. "People like to use cash," he notes. "Some still squirrel away cash under their mattresses. They know it's always going to be there, and it won't disappear."

Mary Kathleen Flynn is a print and broadcast reporter who has covered technology and its impact on consumers for more than 15 years. She is currently writing and editing articles about a wide range of topics including business, technology, history and travel for a variety of publications and publishing companies, including Newsweek, The New York Times, U.S. News & World Report, PC Magazine, eWeek, Baseline, State Tech, CSO Magazine, Popular Science, Brattleboro Reformer, Southern Vermont, Conde Nast and Primedia. She is also producing videos and writing...
More »